China's Investment Rate: Characteristics and Implications

30 Pages Posted: 30 Nov 2015 Last revised: 16 May 2018

See all articles by Carsten A. Holz

Carsten A. Holz

Hong Kong University of Science & Technology (HKUST) - Division of Social Science

Date Written: May 13, 2018

Abstract

China’s rapid economic growth over the past forty years was in good part driven by capital accumulation, with, in recent years, investment taking up almost half of output. This paper documents the role of investment in driving economic growth in China, questions how much longer China can sustain high investment rates, and critically examines arguments suggesting an end to the investment boom. The size of the Chinese economy allows investment to remain broad-based across all economic sectors, with little specialization. The foreign share of investment in China has become negligible, and the China growth story thus has become a domestic one.

Keywords: investment rate, capital-output ratio, ICOR, national investment strategy, economic growth

JEL Classification: E01, E22, E6, O11, O53

Suggested Citation

Holz, Carsten A., China's Investment Rate: Characteristics and Implications (May 13, 2018). Available at SSRN: https://ssrn.com/abstract=2696760 or http://dx.doi.org/10.2139/ssrn.2696760

Carsten A. Holz (Contact Author)

Hong Kong University of Science & Technology (HKUST) - Division of Social Science ( email )

Division of Social Science
Clear Water Bay
Clear Water Bay, Kowloon
Hong Kong

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